MPEG LA counters Google WebM with permanent royalty moratorium

MPEG LA has allayed fears that it could start charging royalties for online …

The MPEG Licensing Association—the group responsible for handling the necessary patent licensing for use of MPEG video codec standards—has announced that it will not charge royalties for AVC/H.264 encoded video that is made available to view via the Internet for free. The group earlier this year had extended its limited moratorium on licensing fees for free Internet video until the end of 2015.

Today's announcement by the MPEG LA extends the time period of the moratorium for the life of its "AVC Patent Portfolio License," effectively making free-to-view H.264 encoded video royalty-free indefinitely. The MPEG LA noted that licensing fees will still be in effect for video that consumers pay for, such as AVC-encoded Blu-ray discs, on demand services like Hulu+, and pay-to-download services like iTunes.

The move to effectively eliminate licensing fees for free Internet video is likely an effort to prevent Google's new WebM standard, built with technology it gained from acquiring On2 last year, from gaining any serious traction as a de facto Web standard for video. Despite Google's backing and support planned for Chrome, Firefox, and Opera browsers, the MPEG LA has suggested that the VP8 codec used by WebM is likely covered by patents held by its member companies. If WebM does prove to be encumbered by the same patents as H.264, which is already widely used for online video, there would be little reason to switch away from H.264 in its favor.

Wouldn't a small startup prefer a standard that charged NO fees for any content? "Covered by patents" doesn't mean it VP8 HAS to require fees, it's just that it can. If there's peripheral money to be made by being the standard, it's a good idea to at least try to become such an item...

This should put the whole H.264 vs. unspecified, and not even half as widely supported, other format argument to rest.

These are very reasonable licensing terms.

WebM is only going to be covered in a morass of lawsuits in the near future.

But why would MPEG LA change their licensing terms if they thought WebM was going to be covered in a morass of lawsuits in the near future like you do? Doesn't this change sort of suggest they believe WebM could be a none infringing competitor?

This should put the whole H.264 vs. unspecified, and not even half as widely supported, other format argument to rest.

These are very reasonable licensing terms.

WebM is only going to be covered in a morass of lawsuits in the near future.

But why would MPEG LA change their licensing terms if they thought WebM was going to be covered in a morass of lawsuits in the near future like you do? Doesn't this change sort of suggest they believe WebM could be a none infringing competitor?

They've made their sums and decided that the revenue from encoders and decoders is enough, given the threat from WebM. The more H.264 video there is to decode, the more decoders are sold - oh yes, every decoder in every browser must pay, even though Hulu, iTunes and YouTube have just escaped paying!

"No licenses or payments are required to be able to stream or distribute content in AAC format. This reason alone makes AAC a much more attractive format to distribute content than MP3, particularly for streaming content (such as Internet radio).

However, a patent license is required for all manufacturers or developers of AAC codecs. It is for this reason FOSS implementations such as FFmpeg and FAAD are distributed in source form only, in order to avoid patent infringement."

Looks like MPEGLA is afraid to test their patent portfolio in the courts, against WebM. This can only be good. Maybe Google could take the hint and become even more aggressive, developing updated variants of WebM that add some of the extra tricks that would tramp over patents... then if we're lucky, MPEG LA shies away and keeps their tail between their legs; or they go to the courts and lose.

In a more likely scenario, they win the battle but some of the patents are invalidated as casualties - that would already be good enough, and unencumbered codecs could make another batch of safe incremental improvements by milking the techniques which are now patent-free.

Even in the worst-case where they totally kill Google in the courts, we can probably continue using the current WebM spec. (If they only sue when some WebM.Next codec is released, Google's lawyers can claim that the old WebM functionality is exempt from any claims because the patent holders didn't challenge it until the new version was available... this is important in patent law, judges don't like when a patent holder sits years doing nothing while allegedly-infringing products exist, then only sue later when new facts happen, like said products being enhanced or capturing more market.)

This should put the whole H.264 vs. unspecified, and not even half as widely supported, other format argument to rest.

These are very reasonable licensing terms.

WebM is only going to be covered in a morass of lawsuits in the near future.

But why would MPEG LA change their licensing terms if they thought WebM was going to be covered in a morass of lawsuits in the near future like you do? Doesn't this change sort of suggest they believe WebM could be a none infringing competitor?

They've made their sums and decided that the revenue from encoders and decoders is enough, given the threat from WebM. The more H.264 video there is to decode, the more decoders are sold - oh yes, every decoder in every browser must pay, even though Hulu, iTunes and YouTube have just escaped paying!

Actually none of those you mentioned escape paying. They all SELL VIDEO. The biggest problem with the licensing terms from MPEG LA have always been how vague they are about what constitutes freely distributed on the Internet vs. paid for content. If the site with the free video has ads on it does that count as for profit video distribution? In the case of YouTube, the profit is quite large. If any ad on the distribution site counts as profit (which is probably the interpretation MPEG LA is relying on given their refusal to clarify this point) then pretty much nobody can distribute H.264 video for free. Even private blogs usually make a few tens of dollars a year off of advertisements. It doesn't matter how many concessions you make in your licensing terms if they are all so vague that nobody knows who they do and don't apply to.

Patents apply regardless of implementation, they patent the concept which is dangerous. Plagiarism has to be for the most part a verbatim copy to apply. Regular patents allow for modifications for innovation. Software patents on the other hand stagnate without innovation, under threat of litigation.

I am sorry. Can someone please explain to me (or post a link) why Opera and Mozilla have to pay to use H.264 in their browsers, but Apple and Microsoft do not? I have always been puzzled by this.

Apple and Microsoft pay it out of their pockets (in reality, discounting against the fees both of them would receive from the MPEG-LA, since they own several patents regarding video compression and H.264)

For (a) (1) branded encoder and decoder products sold both to end users and on an OEMbasis for incorporation into personal computers but not part of an operating system (adecoder, encoder, or product consisting of one decoder and one encoder = “unit”),royalties (beginning January 1, 2005) per legal entity are 0 - 100,000 units per year = noroyalty (this threshold is available to one legal entity in an affiliated group); US $0.20 perunit after first 100,000 units each year; above 5 million units per year, royalty = US $0.10per unit. The maximum annual royalty (“cap”) for an enterprise (commonly controlledlegal entities) is $3.5 million per year 2005-2006, $4.25 million per year 2007-08, $5million per year 2009-10.8

For (a) (2) branded encoder and decoder products sold on an OEM basis for incorporationinto personal computers as part of a computer operating system, a legal entity may payfor its customers as follows (beginning January 1, 2005): 0 - 100,000 units/year = noroyalty (available to one legal entity in an affiliated group); US $0.20 per unit after first100,000 units/year; above 5 million units/year, royalty = US $0.10 per unit. Themaximum annual royalty (“cap”) for an enterprise (commonly controlled legal entities) is$3.5 million per year in 2005-2006, $4.25 million per year in 2007-08 and $5 million peryear in 2009-10.9

5 million dollars!

Opera would fall in the (a). Maybe Opera will have to offer two download versions, one free and one with "H.264 tax".

This announcement still doesn't solve the problem. There is a lot more content out there than just "free to view". As a user I would much prefer a format where both free and pay video content is not subject to licensing fees and patent issues, so I hope Mozilla and others continue to say NO to these formats.

actually, i guess that means google is being pretty evil. If they meant to kill WebM by creating it, and they knew Firefox could not, under FOSS, use h.264, then WebM would essentially be a large investment into making Chrome a far more viable and marketable product, since it would be able to have a functionality ff could never have. its only real competition would be ie and safari, which almost everyone hates already...

Sounds like they're leaving wiggle room for the License itself to go away at some point prior to to the expiration of the patents... but IANAIPL.

As for Mozilla and Opera, it seems like MPEG LA only went halfway to solving their problems. They ought to offer a permanent royalty-free license to any playback software that's distributed freely, and leave the paid licenses to hardware.

Well, it's not really out of principle if they need to close-source their software in order to have H264 decoder in their browser is it? That's like saying Ferrari doesn't make rebranded Kias out of principle. If they did, it wouldn't be a Ferrari anymore, would it?

:EDIT:In fact, I believe Mozilla doesn't include H264 support out of legal obligation, because they're legally obliged to provide all new versions of their software completely for free and allow the user to see and change it source at will, as per their EULA.

Well, it's not really out of principle if they need to close-source their software in order to have H264 decoder in their browser is it? That's like saying Ferrari doesn't make rebranded Kias out of principle. If they did, it wouldn't be a Ferrari anymore, would it?

My understanding is Firefox could license the H.264 patents for themselves and still distribute the source code (since patents don't cover code, they cover what the code does), the problem is that they couldn't license it for everyone else who might use that code in the future... essentially, even though the code would be under a free software license for copyright, the patents would prevent anyone not Mozilla from using the code. If HTML5 video becomes as prevalent as groups like Mozilla want, then this could be a significant problem.

The GPL, MPL, etc. are a copyright license, so they only cover the right to use the source without copyright violations. (GPLv3 has a patent license, but Firefox's trilicense is version 2 "or later")

Note that I'm not a lawyer and I don't work for Mozilla, so my understanding could be totally and completely wrong.

It seems both Opera and Mozilla will have to use an OS native decoder (thereby licensed by the OS manufacturer) to render <video>, creating the worst kind of cross-platform spaghetti code - each platform will have to handle <video> differently - DirectVideo in Windows, Quicktime in OSX, Whatever in Linux. Might as well use a browser plug-in!

If you are running a business, then stuff like licensing costs is an inherent part of that business.

Even a smaller browser can achieve H.264 playback without having to pay anything. They simply need to use the OS'es built in codecs (which MS and Apple have already paid for).

I can understand and sympathize with Opera's position. They state they can't afford it (which might be a reasonable claim, considering they manage to spend ~80mn a year, leaving them with a little over 7mn in pre-tax profits).

I cannot sympathize with Mozilla at all. They admit the money is not the problem (And it shouldn't be considering how much they make), but rather, they don't want to add it out of principle. Yet, they seem to have no such qualms against Flash (which is decidedly not open source, or patent-unencumbered).

Opera would fall in the (a). Maybe Opera will have to offer two download versions, one free and one with "H.264 tax".

Do you realize that Opera has 90+mn in revenues, while Mozilla has about 80mn in revenues last year (probably a lot higher now).

For a "non-profit" Mozilla is doing pretty damn well for itself.

If you are running a business, then stuff like licensing costs is an inherent part of that business.

Even a smaller browser can achieve H.264 playback without having to pay anything. They simply need to use the OS'es built in codecs (which MS and Apple have already paid for).

I can understand and sympathize with Opera's position. They state they can't afford it (which might be a reasonable claim, considering they manage to spend ~80mn a year, leaving them with a little over 7mn in pre-tax profits).

I cannot sympathize with Mozilla at all. They admit the money is not the problem (And it shouldn't be considering how much they make), but rather, they don't want to add it out of principle. Yet, they seem to have no such qualms against Flash (which is decidedly not open source, or patent-unencumbered).

This is simply baffling- Flash is a browser plug-in that the user chooses to install, it's not a core feature and when you download Firefox it doesn't include Flash. Mozilla always has allowed proprietary add-ons to the browser- it's the core browser features that are different.

It's a different ball of wax to Flash. Flash is a browser plug-in, individually installed and licensed by Adobe - Mozilla does not distribute Flash as part of the code, as was the ideal of <video> support, back in more innocent times.

I wonder under what terms is Google distributing Flash and PDF bundled in Chrome?

The reasoning for trying to do <video> without resorting to browser plug-ins was to make Web Apps (and the "HTML5 API") less dependent of the underlying operating systems.

This is simply baffling- Flash is a browser plug-in that the user chooses to install, it's not a core feature and when you download Firefox it doesn't include Flash. Mozilla always has allowed proprietary add-ons to the browser- it's the core browser features that are different.

You are right. I am not sure why I thought I had Flash pre-installed on firefox when I last downloaded it(a long time ago, since i only use Chrome now).

Wouldn't a small startup prefer a standard that charged NO fees for any content? "Covered by patents" doesn't mean it VP8 HAS to require fees, it's just that it can. If there's peripheral money to be made by being the standard, it's a good idea to at least try to become such an item...

That would be true if Google or some other supporter of open standards held all the patents that cover VP8. However, that isn't what people are worried about. They are worried that VP8 infringes on patents held by other companies who will start suing once it becomes popular. In particular they are concerned that many of the patents that cover H.264 may also cover VP8 due to their similarities. Those patent holders have already shown themselves eager to collect royalties whenever they have the opportunity, so they will no doubt try to cash in on VP8.

tigas wrote:

This is good news, but what about software including playback capabilities? Would Opera and Mozilla still need to pay some sort of royalty for playback of MPEG4/H264 data files?

Yes, they will. Which makes this announcement underwhelming. All it means is that the licensing for H.264 will only be slightly worse than MPEG2, not ridiculous. It is still unacceptable for open source implementations.

dlux wrote:

If this was truly the intended outcome from Google (although it would sem to be a rather expensive gamble), then they just got a significant credit on the 'do no evil' side of the board.

Bagha wrote:

I bet the team at Google popped the champagne when this was announced. This is exactly what they've wanted all along!

No it wasn't what they wanted. The goal of VP8 is to create a truely royalty and license free video format, not to induce a very minor licensing change on H.264 - in fact this may not even apply to Google (see Swarley's post below).

jllvt wrote:

I am sorry. Can someone please explain to me (or post a link) why Opera and Mozilla have to pay to use H.264 in their browsers, but Apple and Microsoft do not? I have always been puzzled by this.

Apple and Microsoft do pay to use H.264 in their browsers. In fact they go beyond this and pay to distribute decoder with the operating system itself, which any application can then legally use. This is why many people have advocated that Firefox and Opera should just use the video decoding routines supplied by the operating system. However, this is just passing the buck, and on an open source operating system like Linux the buck has to stop somewhere.

Osvaldo Doederlein wrote:

Looks like MPEGLA is afraid to test their patent portfolio in the courts, against WebM.

This is a minor quibble, but from what I understand MPEG-LA can't enforce patents against VP8 - the members of the patent pool have only given MPEG-LA authority to enforce licensing of patents for use with MPEG standards (like H.264). The individual patent holders will need to take action on VP8 if they believe they have any cause to do so.

Swarley wrote:

The biggest problem with the licensing terms from MPEG LA have always been how vague they are about what constitutes freely distributed on the Internet vs. paid for content. If the site with the free video has ads on it does that count as for profit video distribution? In the case of YouTube, the profit is quite large. If any ad on the distribution site counts as profit (which is probably the interpretation MPEG LA is relying on given their refusal to clarify this point) then pretty much nobody can distribute H.264 video for free.

"The MPEG LA noted that licensing fees will still be in effect for video that consumers pay for, such as AVC-encoded Blu-ray discs, on demand services like Hulu+, and pay-to-download services like iTunes."

So if you have a business making pay to view "cough" videos, what codec would you prefer? I think that for companies concerned with the cost of licensing, WebM is still an interesting option.